Inchcape PLC Encouraging second half performance – exciting future ahead

Inchcape plc

Inchcape plc (LON:INCH) have today provided results for the year to 31 December 2020.

2020 highlights:

• Group revenue £6.8bn, down 19% on an organic basis and 27% reported. Q4 organic decline of 9% (Q3: (10)%)

• Pre-exceptional PBT of £129m (2019: £326m); supported by gross margin resilience in the second half (vs prior year)

• Statutory loss before tax of £128m, reflecting £257m of exceptional charges (largely non-cash)

• Further strengthened our financial position: net cash of £266m (Dec-19: £103m), with 2020 free cash flow of £177m

• Returning to the dividend list: dividend of 6.9p proposed for the year

• Continued shift towards Distribution: signed four new distribution agreements and made further Retail disposals

 20202019% changereported% changeconstant FX1% changeorganic2
Key financials     
Revenue£6,838m£9,380m(27)%(25)%(19)%
Operating profit (pre exceptionals) 1£166m£373m(56)%(54)% 
Operating margin12.4%4.0%(160)bps(150)bps 
Profit before tax (pre exceptionals) 1£129m£326m(61)%(59)% 
Basic EPS (pre exceptionals) 123.6p59.9p(61)%  
Dividend per share6.9p8.9p(22)%  
Free cash flow 1£177m£213m(17)%  
      
Statutory financials     
Operating (loss) / profit£(92)m£449m   
(Loss) / Profit before tax£(128)m£402m   
Basic EPS(35.6)p79.0p   

1.  These measures are Alternative Performance Measures, see note 13.

2.  Organic growth is defined as sales growth in operations that have been open for at least a year at constant foreign exchange rates

Duncan Tait, Inchcape Group CEO:

“Our 2020 results came in ahead of recently upgraded expectations, supported by increased resilience of demand for both Vehicles and Aftersales services in the fourth-quarter. The Group’s inherently cash-generative business model contributed to the strengthening of our overall financial position during the second half.

While the COVID-19 situation remains dynamic, as of today almost all of our markets are open. In many markets where we are facing restrictions, we are able to deliver vehicles, offer a click-and-collect service and to continue to perform Aftersales services. These capabilities helped our top-line performance in the second half of 2020 and contributed to the operating margin recovery from the first half.

In response to COVID-19, the Group implemented a significant cost-restructuring programme. This is now substantially complete, and we are leveraging our leaner structure to build a better business for the future. In addition, we continued to rebalance our portfolio towards the more attractive Distribution segment, securing new distribution business in both Americas and Europe, and further reducing our Retail business.  

Inchcape has strong foundations, and the growth of Distribution remains its central focus. As we enter the next phase of our journey, we will be supercharging certain elements – in particular, our use of data and digital – which will drive even faster growth of our distribution core. At the same time, we see significant opportunity to capture more of a vehicle’s lifetime value – an area that is underserved by us today. This will in turn drive growth within our current footprint, and open up opportunities for even faster expansion in new markets, with both existing and new OEM partners. In setting the future direction we concluded that there are plenty of opportunities for an ambitious Inchcape to thrive in this new world of mobility, and established the goal to become the undisputed distributor of choice for OEMs.

I am confident that the momentum we were seeing prior to the pandemic will return, and that our focus on the long-term growth opportunities in Distribution will create value for all our stakeholders. As a result of our strengthened financial position and confidence in the future, we are pleased to resume dividend payments with a proposed final dividend of 6.9p for 2020.”

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